I have good news to report. A tentative agreement has been reached, and it appears that the Legislature will be able to adjourn next week. If you have been reading the newspaper or watching the news, you probably believe that the stalemate was a question of teacher salary increases versus tax cuts for seniors.

This is not correct. The issue was sustainability. How could we do both - increase teacher salaries and cut taxes for Iowan over 65 years of age?

Last Monday, Governor Vilsack offered a compromise that he believed was reasonable. The Republicans rejected it and the House Republicans sent their members home on Tuesday. House Democrats stayed in Des Moines, convinced that we needed to hunker down and work toward a settlement.

On Wednesday, House Democrats offered a compromise on the House floor that we believed could end the log jam and allow everyone to be winners.

The Republicans said nothing. On Thursday at 3 o’clock, we gave them until Monday to respond. Within hours, an agreement was reached.

The following is a summary of the agreement:

• $35 million in each of the next three years to increase teacher pay. It is estimated that for every $30 million increase in state money, the average teacher salary would increase by $1,000. This would move teacher pay from 41st in the nation to as high as 32nd.
• $100 million income tax cut for seniors phased in over eight years. Social Security income will become tax-free, and taxpayers aged 65 and over eventually will pay no tax on other income up to $24,000 for singles and $32,000 for couples.
• Fill the cash reserve fund fully at 7.5% and repay more than $50 million to the Senior Living Trust Fund.
• Increase reimbursements 3% to health & human services care providers for care of Medicaid patients. This actually helps everyone. When the General Assembly fails to adequately fund Medicaid, those losses must be shifted to other payers, including the costs to small business. There is no more significant action the legislature can take to impact private health insurance rates than to adequately fund Medicaid.
• Early Childhood will receive a $15 million boost to early childhood education in 2007 and a $5 million jump in 2008. Funds will go to Community Empowerment to provide parenting education, family support and to increase access to quality pre-school experiences for 4 year olds.

The Governor has personally asked me to help direct the legislative policies that will drive the expanded early childhood programs, so I hope to provide more detail on our expanded early childhood plans and other actions of the Iowa Legislature in next week’s article.

You can write me at the State Capitol, Des Moines, IA 50319; call me at 515/281-7328 or e-mail me at ro.foege@legis.state.ia.us.

Ro

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